European shares see mixed trading

European traders are concerned about events in the US and consequently shares have seen mixed trading today as US housing and credit woes continue to cast a shadow over global stock markets.

The UK’s FTSE 100 index was up 24 points after initially falling 43 points to 6,126 by early afternoon. Germany’s Dax lost 11 points to 7,419, the Dax was also hit by a fall in German consumer confidence last month, the turmoil in the markets was thought to be responsible.

Merrill Lynch warned that the credit squeeze will affect bank profits resulting in the latest share turbulence. In addition, investor confidence was also affected by weak US consumer sentiment figures.

A recent meeting of the Federal Reserve suggested a US interest rate cut may not be forthcoming. Minutes from the meeting showed that while the committee’s members realised that the problems in the financial markets might need a policy response, they did not act at the start of August because they were keeping their concentration on inflation.

A senior investment strategist at Mitsubishi Capital UFJ Securities remarked that everyone is worried and they are yet to see the full extent of the sub-prime loan problems. Sub-prime default levels have risen to record highs in the US over the last 12 months in the face of higher mortgage rates.

This has raised concerns that this could hamper credit availability in the broader market, not just in America, but globally.

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